There is no doubt that we have seen a change in Melbourne’s property market over the last few months. We are seeing properties pass in at a higher rate and the power shifting in favour of buyers. There are many factors affecting the current market and many reasons why buyers should consider taking action now.
Cash rate & borrowing
Sustained low interest rates have provided Melbourne buyers with the ideal environment to purchase property, supporting much of the city’s price growth in recent years. The cash rate remains at an all-time low, but is expected to be increased by the Reserve Bank in the near future.
Borrowing is also likely to become more challenging for homebuyers with tighter lending standards and uncertainty around the banking Royal Commission. With these factors in mind, buyers should consider making a move before conditions shift again.
Long-term property price growth
Property price growth in Melbourne has been on a steady increase since 2012, with this period characterised by consecutive quarters of house price improvement. In this time Melbourne’s house prices experienced growth of more than 70%, peaking at the end of 2017.
Prices have now moderated in comparison to 2017, homes are more affordable and the market has swung in the favour of buyers, causing more properties to pass in at auction. However, price growth is expected to continue to trend positively in the long-term, with Melbourne starting to close its median house price gap with Sydney. Now could be the ideal time for Melbourne buyers to secure a property, while prices are somewhat affordable.
Population growth is one of the fundamental drivers for housing demand. Victoria is currently tracking well above the long-term average for the state and Australia, setting Melbourne on track to become the largest Australian city by 2030. Population growth brings more competition and will push prices up further in the long-term. Making an investment in property now is likely to pay dividends for many years to come.
If you are a buyer looking to secure a property this spring or would like to discuss the current market, contact your local Jellis Craig office.